Valuing outcomes in urban forestry

Eric Pickles says that local government must become more efficient[1]. It’s nothing new. Sir Peter Gershon was saying the same thing back in 2004[2] and increasing efficiency was an important driver of the public sector reforms of the Thatcher era[3]. We all need to work hard to increase productivity, but how do we know if we’ve succeeded?

Productivity goes up if the ratio of outcomes to inputs increases. Outcomes are not what is actually produced, but the satisfaction that a customer gains from these[4]. So in a bed factory the inputs are labour, materials etc, the outputs are beds and the outcomes are a good night’s sleep. Directly measuring the value of a good night’s sleep is quite hard, but the market gives us a pretty good idea by showing what a customer is prepared to pay for a bed. Consequently it’s common in the private sector to use outputs as a proxy for outcomes when assessing productivity.

The outputs and outcomes of local government are not generally traded in the market, so assessing their value is rather more difficult. Let’s consider how we might go about assessing the value of outcomes from one particular local government service, that of managing public trees.

There are some particular problems with this area. Firstly, trees grow slowly. The effects of changes in the way they are managed can take many years to become apparent. The effects of planting a new tree at a particular place will not be fully apparent for several decades, in much the same way as the effect of education on a person’s job prospects and salary lags well behind the actions of a school teacher. Secondly, the outcomes of managing public trees are many and disparate, and often difficult to disentangle from other causes. They can range from a sense of well being[5] to cleaner air[6][7], reduced crime[8], reduced CO2 emissions[9], flood mitigation[10], increased economic activity[11] and more[12]. Thirdly, whilst value in the private sector is usually viewed from the perspective of a consumer, many of these values are wider and can be characterised as being social or environmental[13].

One potentially straightforward way to assess efficiency gains in the public sector is to assume that output is equal to input and to establish an indicator of service quality. A given increase in quality over the base line can then be quantified by reference to the baseline input[4]. However, given the complex nature of the outcomes of tree management, establishing an indicator that reflects overall performance would be difficult. Furthermore, the delayed impact suggests a need to be able to account for anticipated future benefits.

The concept of Social Return on Investment (SROI) has gained some support recently[14]. SROI uses financial proxies to monetise the outcomes of activities that have social benefits and can be used either evaluatively or to forecast future value[15]. If suitable proxies can be found it could offer a way forward.

The i-Tree system may help provide those proxies. Developed by the USDA Forest Service, i-Tree is a software modelling package that can be used to estimate the value of a range of benefits, including energy and CO2 saved, stormwater runoff, air quality and increases in house values[16]. Its use so far in the UK has been limited and the two publicised studies, in Torbay and Edinburgh, restricted themselves to estimating the value of carbon storage and air quality[17][18]. Benefits are context sensitive—the savings on air conditioning costs deriving from shade trees are likely to be rather more in San Fransisco than in Sheffield for example—and much of the work on monetising benefits has been done in the US. Further work is needed to adapt i-Tree to the UK context, but it shows some promise as a means of monetising the outcomes of urban forestry.

A significant problem remains, however. The UK valuation figures are based largely on avoided costs—societal costs of poor air quality, notional costs of “non-traded carbon”[18]. As such they do not represent the value that citizens attach to urban trees. One aspect of the US model, house prices, can be said to represent citizen based value in that it represents a revealed preference, but beyond that the views of citizens are largely absent from the system. Given that so much of the value of urban trees can be seen as social and environmental it may be appropriate that valuation is not based solely on citizens’ views, but is it right that those views are excluded altogether?